SEC steps back from defining digital assets in new hedge fund rules
The United States securities regulator is holding off from ratifying the definition of the term “digital assets” in rules that govern reporting disclosures for hedge and private equity funds, despite proposing to do so some nine months ago.
On May 3 the Securities and Exchange Commission (SEC) published amendments to Form PF — a form that SEC-registered funds complete to disclose basic information about their fund so the regulator can assess potential “systemic risks.”
The SEC originally included a digital assets definition in an August 2022 proposal for the changes. If it went into effect, it would have been the first time the SEC defined “digital assets.”
Fast forward to today and the regulator says it's not going ahead with adding the definition, at least for now.
The definition the SEC put forward for digital assets was an asset “that is issued and/or transferred using distributed ledger or blockchain technology” and included other commonly used terms such as “virtual currencies,” “coins” and “tokens.”
Today the SEC finalized their new Form PF rules. The proposal included the 1st definition of “digital assets” in a rule. It is interesting that the SEC choose to NOT adopt the definition in their final rule. https://t.co/5y1UXbJqBd
The SEC said in its August proposal that currently, information regarding a fund's digital assets are reported in an “other” category and results in “less robust Form PF data for analysis.”
It proposed the definition in order to obtain separate, and by extension, more accurate reporting on such assets.
However, the latest updates to the SEC’s Form PF rules now require — among other new requirements — that SEC-registered funds report the occurrence of key events that could indicate systemic risk or
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